Picking the right funding partner

An entrepreneur asked me a question last week that I get a lot when I meet founders/CEOs: How do I pick the right VC partner?

My answer to that question reflects a bias from being on the operating side of the board table far longer than the funding side.

But here’s what I tell a CEO: If a company is in the fortunate position of having more than one venture firm interested in funding them, consider two requirements that every VC partner should bring to the table before making a choice.

The first is obvious: the VC must have cash available to invest inside the time-frame required.

The second is value – real, impactful, strategic value.  How do entrepreneurs assess this value during courting?  Easy.  If the VC partner you are engaged with did not bring money to the table, would you aggressively seek them out to join your board of directors anyway?

If the answer is yes, go for it.  If the answer is anything else, keep looking.  With funding comes dilution, so make sure the choice you make is worth it.